SEC Filings

10-Q
MEDTRONIC PLC filed this Form 10-Q on 12/04/2017
Entire Document
 


Free Cash Flow
Free cash flow, a non-GAAP financial measure, is calculated by subtracting property, plant, and equipment additions from operating cash flows. Management uses this non-GAAP financial measure, in addition to U.S. GAAP financial measures, to evaluate our operating results. Free cash flow should be considered supplemental to, and not a substitute for, our reported financial results prepared in accordance with U.S. GAAP. Reconciliations between net cash provided by operating activities (the most comparable U.S. GAAP measure) and free cash flow are as follows:
 
Six months ended
(in millions)
October 27, 2017
 
October 28, 2016
Net cash provided by operating activities
$
1,644

 
$
3,022

Net cash used in investing activities
6,125

 
(357
)
Net cash used in financing activities
(7,277
)
 
(2,651
)
 
 
 
 
Net cash provided by operating activities
$
1,644

 
$
3,022

Additions to property, plant, and equipment
(524
)
 
(598
)
Free cash flow
$
1,120

 
$
2,424

 
 
 
 
Dividends to shareholders
$
1,247

 
$
1,192

Repurchase of ordinary shares
1,888

 
2,794

Issuances of ordinary shares
(230
)
 
(260
)
Return to shareholders
$
2,905

 
$
3,726

Return of operating cash flow percentage
177
%
 
123
%
Return of free cash flow percentage
259
%
 
154
%
Debt and Capital
Our capital structure consists of equity and interest-bearing debt. We use a combination of bank borrowings and commercial paper issuances to fund our short-term financing needs. Current debt, including the current portion of our long-term debt and capital lease obligations, was $3.1 billion at October 27, 2017 compared to $7.5 billion at April 28, 2017. We utilize Senior Notes to meet our long-term financing needs. Long-term debt was $25.9 billion at both October 27, 2017 and April 28, 2017.
Total debt at October 27, 2017 was $29.1 billion, as compared to $33.4 billion at April 28, 2017. The decrease in total debt was primarily driven by the repayment of our senior unsecured term loan and senior notes detailed below, along with a reduction in our commercial paper borrowings of $201 million.
During the three months ended October 27, 2017, we used a portion of the proceeds received in connection with the divestiture of our Patient Care, Deep Vein Thrombosis, and Nutritional Insufficiency businesses to repay our senior unsecured term loan, including accrued interest, for $3.0 billion. Additionally, we repaid our 6.000 percent ten-year 2008 CIFSA senior notes, including accrued interest, for $1.2 billion.
We maintain a commercial paper program for short-term financing, which allows us to issue unsecured commercial paper notes on a private placement basis up to a maximum aggregate amount outstanding at any time of $3.5 billion. At October 27, 2017, we had $700 million of commercial paper outstanding, as compared to $901 million at April 28, 2017. During the three and six months ended October 27, 2017, the weighted average original maturity of the commercial paper outstanding was approximately 30 and 31 days, respectively, and the weighted average interest rate was 1.31 percent and 1.27 percent, respectively. The issuance of commercial paper reduces the amount of credit available under our existing line of credit, as explained below.
We also have a $3.5 billion syndicated line of credit facility ($3.5 Billion Revolving Credit Facility) which expires in January 2020. The $3.5 Billion Revolving Credit Facility provides backup funding for the commercial paper program and may also be used for general corporate purposes. The $3.5 Billion Revolving Credit Facility provides us with the ability to increase our borrowing capacity by an additional $500 million at any time during the term of the agreement. At each anniversary date of the $3.5 Billion Revolving Credit Facility, but not more than twice prior to the maturity date, we could also request a one-year extension of the maturity date. At October 27, 2017 and April 28, 2017, no amounts were outstanding on the committed line of credit.

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